How to Control Credit Card Debt

Getting control of your credit card debt is key to personal financial success and personal happiness. There are some basic and easy things you can do to get your situation under control.

First step in this healing process is to stop spending on your credit cards. Take the cards out of your wallet and either cut them up, or put them in a safe deposit box. If you have them accessible, you may use them and just continue the cycle. No matter what, you need to only buy things with cash or your debit card, and cannot rely on your credit cards anymore.

Look at your interest rates and credit limits on your various cards if you have several. If there is a wide range of rates, you may want to move some balances around. Remember your credit score is based on your overall balance and limits, not individual cards. If you have a balance on a high rate card and available credit on a lower rate card, you may want to move the balance there.

To improve your credit score each month, you want to have balances under 30 percent of your available credit. This is an overall number, the amount of your balances on all cards, as compared to the total credit limit offered to you. Credit issuers want to see you have credit available, but are not using it. You can also call the card issuers to see if they will match the rates offered on your other cards, if you have a strong credit profile.

If your rates are all competitive, it’s usually good to start with the credit card with the lowest balance and attack it. By paying off the lowest card, you get some mental benefits of accomplishing something. So you would pay just the minimum payment on all your cards, except the one you are attacking, that one you pay every penny possible to bring down that balance. Then work your way through the other cards until they are paid off. 

Another suggestion is to always pay a bit more than the minimum payment, even if its $20. New credit card laws now require card issuers to put the length of time it will take to pay off your balance by paying the minimum payment, and then also show the length of time with a higher payment than the minimum, the difference can be shocking.